There is another school of thought, that understands that patents are meant to expire. Merely altering molecular structure towards the end of a drug patent's life without clear benefits so as to circumvent patent expiry is unethical, and against the very spirit of patenting. Thomas Edison's bulb could have enjoyed an eternal patent simply by changing the length of the filament, or size of the glass jacket. Luckily, it didn't, and the incandescent bulb played its role in history.

It is easy to revert to semantics and sophistry in support of domestic industry, particularly when it has tremendous lobbying power. And lobbying is legal in the US, isn't it? The same activity is considered illegal and jailable in India. Cultures across the world differ, and there will be friction at contact points. There is a huge element of subjectivity around the US's illegal (if one is to consider the WTO as legal) and often succesful efforts to subvert Indian exports in the garb of environmental issues, labour laws, subsidies, etc. This very same country sabotaged the Kyoto Protocol, yet cries itself hoarse about the environment. Unfortunate.

Presumably you've never filed a patent before; if you had, you'd know that something can only be patented if its "novel and nonobvious" (http://www.uspto.gov/inventors/patents.jsp). The "eternal patent" you described would never be granted since changing the filament size or bulb circumference fulfills neither criterion. However, if Edison invented a lightbulb with a filament made from a more durable material that lasted longer, that would likely be patentable since it would be a novel and improved form of the lightbulb.

"Merely" altering the molecular structure of a drug (modifying molecules is not as easy as one might think, as anyone taking o-chem will tell you) is in no way similar to your Edison example. Replacing one atom with another, a hydrogen with a fluorine for example, would alter the bond polarization on much or all of the molecule, steric properties, etc., which would likely effect the molecule's pharmacodynamics and/or pharmacokinetics. Changing the 3D structure of a molecule without changing the molecular formula would almost definitely have major effects on the molecule's pharmacodynamics (for example, amphotericin-A vs. amphotericin-B). In both cases, even slight changes to a drug can and do significantly alter its properties, and so is entirely consistent with the spirit of patenting.

Stating a completely incorrect opinion on a subject you clearly know nothing about is unethical, as others might read it and adopt it under the belief that its correct, and is against the very spirit of informed intellectual discourse.

Presumably you've never filed a patent before; if you had, you'd know that something can only be patented if its "novel and nonobvious" (http://www.uspto.gov/inventors/patents.jsp). The "eternal patent" you described would never be granted since changing the filament size or bulb circumference fulfills neither criterion. However, if Edison invented a lightbulb with a filament made from a more durable material that lasted longer, that would likely be patentable since it would be a novel and improved form of the lightbulb.

"Merely" altering the molecular structure of a drug (modifying molecules is not as easy as one might think, as anyone taking o-chem will tell you) is in no way similar to your Edison example. Replacing one atom with another, a hydrogen with a fluorine for example, would alter the bond polarization on much or all of the molecule, steric properties, etc., which would likely effect the molecule's pharmacodynamics and/or pharmacokinetics. Changing the 3D structure of a molecule without changing the molecular formula would almost definitely have major effects on the molecule's pharmacodynamics (for example, amphotericin-A vs. amphotericin-B). In both cases, even slight changes to a drug can and do significantly alter its properties, and so is entirely consistent with the spirit of patenting.

Stating a completely incorrect opinion on a subject you clearly know nothing about is unethical, as others might read it and adopt it under the belief that its correct, and is against the very spirit of informed intellectual discourse.

Jason, for some quick counter-examples that demonstrate your own complete and utter lack of knowledge on the subject, you should watch the indie movie, "Everything is a Remix, part 4" from which I quote below:

"And software patents are written in the broadest possible language to get the broadest possible protection. The vagueness of these terms sometimes can reach absurd levels. For example, 'information manufacturing machine,' which covers anything computer-like, or 'material object,' which covers pretty much anything."

There is a reason that patent law reforms are underway in the US: these laws have been egregiously abused for decades to the detriment of most of the populace and to the benefit of a very small percentage of the populace.

Patent law was invented to incentivize innovation specifically for the benefit of most of the populace. It is now undermining its original goal, but that serves the interests of the wealthiest people in the world and so they devote a tremendous amount of effort (money) to maintaining the status quo.

I don't see any sign that Novartis is on the verge of financial collapse, and with billions in assets, if they do go under, it would probably serve all of our best interests for them to be replaced by a smaller and less powerful innovator for whom making merely millions for a good idea would be enough of a reward to justify the effort of innovating.

As usual, The Economist, instead of presenting the facts clearly, tries to confuse it with generalities and irrelevant stuff instead.

The issue is - what is considered patentable, not whether something deemed patentable and patented is protected by Indian law. The answer to the second question is clearly yes.

The Economist never considered the first question in its story, which is what the Gleevac case was about (how ironic). It then pretends to answer the second question by invoking the verdict of the ruling which really answers the first question.

Companies in the branded pharma industry both in Europe and the US have the strongest balance sheets compared to other industries only with only a few exceptions like technology companies.
I agree that the pharma industry has huge R&D risk for which companies have to protect themselves by charging high prices. But drugs are so priced high that not only the companies have sufficient cushion but also have piles of cash which they use to pay billions in dividends and hold share repurchase programs. The prices clearly seem to be more than making up for risks involved in the industry. I seriously doubt if any of the claims by Novartis that such rulings hamper innovation are true. Their excessive riches clearly show that they charge more from people/government agencies than is required for promoting innovation and earning reasonable profits.

I expect the newspaper like Economist to write the news in a neutral way. Why write every time against the East? At least look at the sales and future of your own business in the East. You need to come out and stop representing your neighbours....be a truly globalised entity. That will allow you to think "just"....rather than keep on thinking that representing the West is right thing to do.

The Indian Patent Law only seems adolescent ; in reality, it is better than the US Patent Law. Look at how the Mobile Companies , the Computer Companies , and the Software Companies are fighting each other outside and inside the courts with little benefit to show either to themselves or to their customers. On the other hand , India's rejection of Novartis's Patent Application has been hailed as a victory by the President of Medecins Sans Frontiers which is evidently a well respected non-profit organization.

It is important to note that nobody _ neither any drug Company nor any Newspaper _ dare say that India's Patent Law oversteps the Global Trips Agreement. The fact is , India's Patent Law adheres to the Trips Agreement in word as well as in spirit.

I really feel sorry for the 40 odd countries who had granted Patent Protection to Novartis's Glivec thereby depriving their citizens an opportunity to be treated at ten percent of the cost they are bearing today. Obviously , many of these 40 countries would hasten to amend their Patent Laws so that such a miscarriage of justice does not happen again. That should be the real worry of Novartis.

What is patentable and what is not is one separate issue and needs to be discussed separately.

Assuming that a drug is patentable, the question is, how to make it available at low costs without hurting the genuine business interests of pharma companies.

The assumption is that pharma companies make inordinate profits hiding behind patents. Most of us (including me), don't know if that is indeed the case. Is there a study on their financial statements? Are they trading significantly above average in stock markets?

If pharma companies are profiteering, then why aren't more companies entering into the industry? What can be done to lower their entry barriers -- these are the questions Indian, American and other governments need to consider. More competition will bring out better prices and more innovation.

We also need to explore how government subsidies can be put in the picture to ensure low cost medicines for patients along with fair remuneration for the innovative pharma companies.

You talk about fair remuneration ? Please note that Novartis did not even try to justify the high price of Glivec to the Supreme Court of India. Novartis did not touch this issue. That is true of all Pharmaceutical Companies selling Patented drugs.

What about Indian private health care companies like Apollo? Can western pharma-tech learn anything from these?

If you are not familiar with Apollo or Indian health care, a gross simplification would be that Apollo treat poor people for free but over-charge the rich for the same treatment. It should be pointed out that Apollo's main venue in Chennai was subsidised by the Indian government and they legislated in 2009 to tighten "treat the poor" requirements - forcing Apollo to keep at least 33% of in-house beds and 40% of outpatient beds for the poor.

Still this business model is proving most lucrative, so, it should come as no surprise that Goldman Sachs have poked their bony fingers in there, investing $520 million (along with others such as Warburg Pincus, Sequoia and the gov of Singapore) in India's basic health care industry in 2012, up from $137 million in 2011.

It is clear that if western pharma-tech charged the same in India as they do in the US/EU, that simply the vast majority of Indians wouldn't be able to afford it. Can they not find a compromise like Apollo and other health care providers in India? I am talking about new-release drugs, not just drugs coming to the end of 20 year patent cycles or drugs being "evergreened" to extend patents.

Let's be pragmatic, the pharma-tech industry in the US will be in rude health for some time to come. The US has basically agreed guaranteed returns for pharma firms via Medispends, so pharma-tech is incentivised to produce drugs which combat society-wide problems rather than concentrating on designing drugs only for the wealthy. So pharma-tech can sell their drugs at inflated prices in the states and Europe, guaranteeing them a certain margin, leaving plenty of room to subsidise their own drugs for the poor in India while breaking even or making a small margin by over-charging the rich in India (or China, Russia, Africa, etc).

Pharma-tech has a moral obligation to society to produce drugs for as large a segment of the population as possible but they also have a professional duty to provide returns for shareholders. Can government and society not work together with pharma-tech to find an equilibrium whereby pharma gets guaranteed margin from the rich to cover the R&D costs, but, once margin has been reached, pharma-tech should be forced to relinquish IPR rights to generic firms? There is nothing stopping big pharma becoming a stake holder in generic firms or selling their own brand drugs at generic prices if that is more profitable.

The alternative seems to be letting the poor suffer and die. It's not just a problem in under-privileged societies - in Chicago (the heroin capital of the US) addicts are forced to steal and sell their bodies to buy heroin when a good health plan could get them promethazine, naltrexone etc and a realistic chance of kicking the habit. It's beyond question that altruistic provision of prescription drugs to addicts in the US would reduce crime, expenditure on public services and increase productivity. But perhaps there is no difference between Goldman Sachs and GlaxoSmithKline, they only exist to be neo-liberal profiteers at the expense of everyone else....

The writer omitted another way to develop drugs..engaging the public. It is not unreasonable to think that people whose lives are or could one day be affected by a serious condition would give a hundred dollars to speed the development of a promising pharmaceutical. Why not secure funding for new drug development by connecting with those most passionately interested in the outcome? Embracing crowd sourcing makes perfect sense and offers an added benefit to patients/families. Helplessness dissipates when someone feels empowered by their actions.

15 years in court? The patent should have expired already. Perhaps if drug companies spent as much time making their drug development pipelines more efficient as they do on marketing and court cases, they'd have more blockbusters and wouldn't be so dependent on their earlier successes. More focus needs to be spent on reforming the time consuming money draining drug approval process. Despite remarkable advances in medical science drug development has been a disappointment. Billions are wasted.

The drug was just made more soluble, which is hardly an innovation that saves more lives. And if they spent billions of dollars in getting that, tough luck, no one is obliged to pay for non-performance. I have seen in WSJ and many other US dailies, complaints about free-loading that India gets on back of US. Effectively, what is being mentioned that 'if we overpay then you must too', else it's freeloading. It was US congress who stopped CMS from negotiating prices with pharma. Then comparative effectiveness study was killed in Healthcare reform. It would have been great to subject Gleevac to that and compare to it's older version.

It's very clearly a choice India has made that this innovation is not worth it and Novartis and others may not bring more of such solubility innovation where they spent billions of dollars. This is in contrast to 'supply driven medicine'in US where every new technology is demanded and paid for by consumer's children (sovereign debt).

Does the US Government knows how many billions of Dollars were spent for increasing the solubility of Glivec ? No. The cancer patients do not pay for the R&D ; they pay for the severance pay packages of the outgoing chairmen of Novartis.

Many of the comments here seem to think this is a "victory" for the poor at the expense of the evil MNC pharma companies. I just can't see it this way.

For a start, no pharma company is altruistic. They are in the business to make a profit, whether they produce branded or generic drugs. The only difference is the business model. Branded pharma companies seek to generate profits through new discovery, and bringing novel treatments to market, and generic pharma companies seek to generate profits through focus on production efficiencies and economies of scale. Both types of pharma companies will attempt to charge as much as the market will pay for their product. The price of this drug in India currently produced by the generic industry players is $2000 per year per patient. That's not cheap, and generics aren't giving it out for free. The concept of making money off the misery and illness of others is morally discomforting, but it is disingenuous to suggest that the generic players are angels and the branded players are demons. They are all composed of individuals, many of whom are passionate about curing and managing the illnesses of others, but with a different focus (novelty v cost).

Most pharma companies have schemes that donate free drugs to the poorest, and also allow discounted drug sales to others, and do pursue differential drug pricing in different countries. I do not know if there is a difference is how much is donated between branded and generic players, but I would assume it is very small in either case.

Bringing a novel treatment to market is unbelievably expensive and extremely risky. Process improvements to maximize efficient production of drugs already brought to market is much, much less expensive. You can't blame the branded pharma companies for attempting to protect profits which are then used to generate new therapies, and you can't blame them for using all legal means to do it.

If proceeds from drug sales were in large part spent in efficient pursuit of better treatments, I think pharma industry would not stir the fierce reactions that it does now.

Profits of drug producers (mainly of the non-generic sort) are seen as unjustified, obtained more through questionable legal actions than bringing useful treatments, and used overwhelmingly to the benefit of shareholders. Let alone accusations that drug producers manipulate mass media to increase various prescription and OTC drug consumption, influence doctors to prescribe their drugs instead of generics/competition (to patients' detriment, if only financial) or even deliberately devise diseases for which they subsquently provide treatment.

"Both types of pharma companies will attempt to charge as much as the market will pay for their product."
.
Nope. Normally, you price it to maximize profit; you offer the product at (to keep it simple here) two different prices (say, 'promotional', and later, regular) then you draw a curve through those two data points and pick the price that maximizes revenues.

But in this case the only novelty is a useless one that the company added for the express purpose of extending the patent-ability of their drug. The court was right to recognize this cynical attempt to rig the system.

It's still a bullet to my head that so many readers of the Economist treat pricing like a religion. This is one of a thousand examples where the price mechanism fails to create ideal results - without patents, why spend billions on innovating drugs that can be sold the next day by a hundred other companies? This is Econ100 stuff. Honestly, I don't like monopolies either, and I'm not saying I have much faith in the government running the economy, but this is a legitimate problem in both directions.

The fact is , the MNC pharma industry has become a dinosaur, bloated by decades of self serving protection of govts, insurance co's and practitioners. Customers around the world are easy meat. When reality of the world outside hits, they will realise what the auto industry, electronic industry, entertainment industry and other have learnt-innovation has no boundary and cant be kept is kitchen closet for long.

India is actually a very poor country despite all the hypes of western media & corrupt congress party
Indians are very price sensitive
Inflation & high prices are never tolerated by Indian voters
Western firms are living in a fools paradise if they think they can milk poor Indians dry who live hand to mouth
350 million Indians sleep hungry every night unable to buy food thanks to Italian christian Sonia !
In the North Indian state of Bihar a poor moslem father sold his 14 year old daughter for 16/- Rupees / 30 US cents !
Imagine his dire poverty & desperation
Western companies should get real & learn from China how to produce cheap & capture markets
Selling goods & services at outrageous prices will never work in India
Western MNC's should think out of the box & sell dirt cheap to capture this vast market

It seems like the West still foots the entire bill for R&D. Just like textbooks, we pay more for the same product. Poorer countries benefit from innovation without paying for it. This is not fair. People in rich countries still die because we can't afford to treat them.

It also holds countries like India back: If India wants to take its place as an economic power representing 1/6 of the global economy, it must find a way to make innovation pay.

Perhaps this needs to be fixed with trade agreements. If the West pays $10 and India pays $1, we should try and converge on $5.

I would agree with you except that this article takes a very excessively pro-pharma line. This was a special case, in which a small improvement to the drug was being marketed under the protection of an entirely new patent. Gleevec is a drug that has already been patented (and had that patent expire), sold as a different anionic salt from the original. Arguably, it should not have been patented in the United States or Western Europe either.

India has a long history of having weak IP law and having a very low bar for compulsory licensing. That's too bad, but this time around it's just given an excuse for Novartis to beat its breast about being wronged to people who don't know the details of the case. I think Novartis is in the wrong this time.

I would agree with you 100%; except that, current patents have existed only for last couple of centuries which means that all previous innovations were used by the whole world including the west at zero cost. IMHO that is not a level playing field. Fast forward to 2300 A.D. the patent regimes will perhaps be more equitable. Even today, if you think R&D is an equal opportunity area across the world, well, explore a bit. There are huge no. of restrictions on access to research, equipment etc. for many countries for multiple reasons.

It's a myth that all the dosh that west doles out goes straight to research. Let's take the much discussed story of Steve Brill in Time- 'Why medical bills are killing us'. There is this scorpion anti-venom Anascorp produced in Mexico for $100. After FDA approval it becomes $3700. The uninsured lady got bill of $83,046 from hospital for same. There is labyrinth of lawyers, lawmakers, consultants, rainmakers etc exercising their innovation in skimming off their margins. It is true that innovation must be paid for but not an evergreening hack.

It would be pertinent to turn this conversation to soaring US healthcare cost. I have closely studied US healthcare costs and drivers and I comfortably concluded many years ago that costs are high because there are no stakeholders interested in cost reduction including consumers who reacted adversely to HMO that had stabilized costs in 90s. Add to that there are multitudes of players and activities in healthcare that have nothing to do with providing direct care. High costs are equated with quality, safety and innovation. Now it is being demanded that developing nations also engage in corporate welfare.

There is an inherent cultural conflict with developing nations needing no frills, result oriented, low priced medicine and some developed nations needing golden wrapped medicines. One solution would be to have a body under WHO to do pharma research for social good.

To end story on a personal note. I got prescribed a medicine for non-malignant spots on skin. My insurance carrier did not pay for it. I was shocked to see it's sticker price of $350. I found out, that the French producer had just obtained FDA approval to market it in US. That explained to me the price. I noted the composition and realized it was there in my anti-dandruff shampoo as well. Got a $3 Equate shampoo from Walmart and in a week spots were gone. I felt no remorse for either the dermatologist or the pharma company.

India's "young" patent law seems to appear pretty practical considering they don't want to include minor tweaks here and there as a true innovation.
Also the question you ask " how to convince governments and consumers to pay for their drugs" - the answer is pretty simple - don't charge exorbitant rates. All these drug companies, at the end of the day, can huff and puff about such decisions stifling "innovation" but giant markets like India are still attractive to them and no matter how tough regulations get, they very well know there's a profit to made here. Good to see some Indian institutions actually functioning!

the article misses out on a very important point. Why should evergreening (patenting drugs with little modifications over a period of time) be entertained anywhere (Even in the western world). Novartis had enough time to make money for the drug during the initial period. It cannot just have incremental modifications to an existing drug and go on patenting it forever.

The issue here is not so much the "novelty" of the innovation, which can be debated, but the substantial cost of demonstrating the benefit of such incremental improvement through clinical trials. Pharma companies who take the risk of demonstrating adding benefits in a clinical setting should be rewarded through a form of market exclusivity (some may propose something less than full-length patent protection). On the otherhand, if India believes that there is no merit in the innovation, why not just copy the earlier version of the drug, instead of insisting to get the new version for free (after Novartis has paid to demonstrate the benefits through clinical trials)?
If India aspires to become a developed nation one day, it needs to show respect for intellectual property. The pharma companies are not responsible for social wellfare. That's the job of the government and NGOs/philantropies.

The issue here is not so much the "novelty" of the innovation, which can be debated, but the substantial cost of demonstrating the benefit of such incremental improvement through clinical trials. Pharma companies who take the risk of demonstrating adding benefits in a clinical setting should be rewarded through a form of market exclusivity (some may propose something less than full-length patent protection). On the otherhand, if India believes that there is no merit in the innovation, why not just copy the earlier version of the drug, instead of insisting to get the new version for free (after Novartis has paid to demonstrate the benefits through clinical trials)?
If India aspires to become a developed nation one day, it needs to show respect for intellectual property. The pharma companies are not responsible for social wellfare. That's the job of the government and NGOs/philantropies.

"The pharma companies are not responsible for social wellfare. That's the job of the government and NGOs/philantropies" - precisely the point and hence the court ruling.
You seriously believe Novartis is going to keep producing the "older" drug if a patent is going to be given for cosmetic changes in the "newer" drug. This is the reason why brand-name drugs are so expensive in developed countries.

To say India 9or any other country) sees no merit in innovation is believe what we in the west have been and are being fed by Novartis et al. The real question is can the drug discovery process be better done elsewhere or in another way. We have all forgotten that the institutions (& co's) exist to fill a need- not to create one. That open sharing of knowledge make the innovation process robust and efficient.

Instead of confiscating IP rights from private companies, the Indian government should fund healthcare benefits by through more sensible governance (fight corruption, trim military spending and space programs which are not aligned with the needs of its impoverished population, etc)

Why spend a substantial cost on clinical trials, when there is no substantial innovation of the product? That is the nub of the issue. The Supreme Court in India did not disrespect IPR when they ruled against Novartis - In simple terms they ruled that the product was similar to the earlier one, and did not deserve additional market exclusivity. If Pharma companies want substantial margins, they are free to do it for a real innovation

India's Patent Law is in conformation to the globally accepted Trips Agreement. But , if anybody feels it is not mature , he should implore WIPO (World Intellectual Property Organization) to frame an International Patent Law. The chances are, India will accept it.